Question

Owner's withdrawals:______.

Answer 1

Answer:

Owner's withdrawals:______.

a) decrease owner's equity.

Explanation:

The withdrawals made by the owner of an entity reduces his or her equity interest in the entity.  Owner's withdrawals are transfers of cash from the business to its owner.  They are not expenses of the business and do not appear in the income statement.  Instead, withdrawals may occur when an organization is spinning off extra cash or when the owner has an immediate personal need for the funds. The forms of business organizations that allow for withdrawals by the owners are the partnership and the sole proprietorship.